To Save America: Stopping Obama's Secular-Socialist Machine (19 page)

Overall, our government bureaucracy has become a giant bubble. Like the bubbles we saw with information technology stocks, housing, and financial derivatives, government has become overvalued compared to its actual return on investment. It’s subject to graft, it favors insiders, and it has become overleveraged to the tune of $11 trillion.

The sheer obsolescence of the culture, rules, and technology of the bulk of modern government means it has to be replaced—not reformed—if we want to remain competitive globally in the twenty-first century.

The Left will bitterly oppose efforts to replace the failed policies and bureaucracies of government because these are all components in the machine the Left have created to stay in power.

One tactic they will use to outlast any replacement effort is a simple, seemingly commonsense demand for “realism.” Whenever conservative candidates or elected officials propose sweeping changes, the media denounce them for being “unrealistic” or even “intellectually dishonest.”

However, faced with the corruption and across-the-board failure of state and federal bureaucracies, the American people do not want “realism,” as long as realism means being too cowardly to challenge the status quo.

When conservatives fall for the trap of being “realistic,” they turn timid. This, in turn, dissipates the energy from the American people that generates voter turnout. And that turnout is what we need to replace the current generation of machine politicians and their outdated bureaucracies.

Ronald Reagan understood the importance of clear statements for real change. That is why, in February 1975, in the depths of the Republican collapse after the Watergate scandal, he told CPAC, the annual conservative convention, that conservatives had to nail their cause to banners of bold colors and avoid pale pastels.

Reagan used this strategy throughout his political career. He had defeated a popular incumbent California governor by more than a million votes because Reagan boldly and clearly declared his opposition to university student radicals, his rejection of more spending and higher taxes, and his commitment to bringing efficiency and eliminating waste in Sacramento.

He again contrasted his clear, profound beliefs with the temporizing “realism” of the Republican establishment in his 1976
presidential primary campaign against President Jerry Ford, when Reagan passionately advocated America’s retention of the Panama Canal. His utter refusal to appease the Panamanian dictator was a stark divergence from Ford’s “realistic” policy of negotiating the canal’s surrender. And of course, in 1980 Reagan again offered Americans a clear choice between his vision of a resurgent America and President Carter’s focus on adapting to American decline.

We can successfully apply Reagan’s example across America, even in the bluest states. In California, 64 percent of voters opposed the 2009 ballot propositions to raise taxes. If a candidate in that state’s 2010 gubernatorial election could galvanize those voters by staking out a convincing (albeit, according to the elites, unrealistic) strategy for fundamentally changing Sacramento, she will have a real opportunity to develop a massive majority to take on the machine.

Similarly, the New York machine has alienated a vast swath of the electorate with its heavy taxes, poor service, corrupt bureaucracy, and privileged unions. With the political class catering to interest groups rather than the general public, there is an opening for Rick Lazio or any other candidate with the courage to advocate replacement over reform. A candidate who vows to shrink Albany and return taxpayers’ money to the rest of the state will enrage the union leadership and the big lobbyists, but he just might arouse enough enthusiasm among voters to overturn the machine.

The 2010 and 2012 elections offer a historic opportunity for conservatives to channel Americans’ widespread dissatisfaction with government into an energetic movement to finally replace the secular-socialist machine. We should boldly propose a replacement model, drawing clear distinctions between our policies and those of our opponents.

There are three questions in particular we can ask whose answers will point to the need for a replacement strategy. Those questions are:

We discussed the first question in chapter one: we are an honest, entrepreneurial, democratic, and God-fearing people struggling against a corrupt, undemocratic, secular-socialist machine buried deep within the government bureaucracy. The solution is to replace that bureaucracy, not to reform it.

In the following chapters, I will discuss the other two questions, and why their solutions also require a replacement model. I will show why, on issue after issue, the Left’s high-tax, big-bureaucracy, heavy-litigation system is incapable of keeping America globally competitive. And I will demonstrate why the Left’s national security paradigm makes America substantially less safe.

All these policies are beyond hope of success. They cannot be tinkered with or renewed or reformed. They can only be abolished entirely and replaced with new ideas that work.

With Peter Ferrara, Director of Entitlement and Budget Policy at the Institute for Policy Innovation

 

 

 

T
he 1970s, when the Left last controlled Washington, was a time of disastrous economic policy failure that should never be repeated. Unfortunately, President Obama and the secular socialists now running Washington seem determined to bring about an even bigger debacle.

Three ever-worsening recessions pounded the U.S. economy from 1969 to 1982. Inflation soared to 11.6 percent in 1979 and 13.5 percent in 1980, a devastating 25 percent increase in prices in just two years. The prime interest rate reached 21.5 percent in 1980, with home mortgage interest rates soon rising to an absurd high of 14.7 percent. Unemployment began an upward climb during the Carter years that eventually peaked at over 10 percent in 1982.

The poverty rate began increasing in 1978, eventually shooting up an astounding 33 percent, from 11.4 percent to 15.2 percent. A
fall in real median family income that began in 1978 snowballed to a decline of almost 10 percent by 1982. Average real family income for the poorest 20 percent of Americans declined by 14.2 percent. Indeed, during the Carter years (1977 to 1981), real income declined for all Americans, from the lowest 20 percent to the highest 20 percent. Real average income of U.S. households was, in fact, in long-term decline from 1970 to 1980.

In 1981, newly elected President Reagan abandoned long-fashionable Keynesian economic policies—the interventionist, big-government, “stimulus” approach that had produced these dismal results. Instead, he explicitly campaigned on, and then implemented, four specific economic policy components that became known as Reaganomics:

Collectively, these were the most successful economic policies in U.S. history, turning a rapid economic decline into a raging economic
boom. The Reagan recovery officially began in November 1982 and lasted ninety-two months without a recession until July 1990, when the tax increases of the 1990 budget deal ended the streak. This set a new record for the longest peacetime expansion ever, the previous high being fifty-eight months.

During these seven years, the economy grew by almost one-third, the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy. In 1984 alone, real economic growth shot up 6.8 percent, the highest in fifty years, as nearly 20 million new jobs were created during the boom, increasing U.S. civilian employment by almost 20 percent. Unemployment fell to 5.3 percent by 1989 (almost half what it had been at the peak of the Carter recession). Labor force participation reached a record 66.5 percent that year, when a record 63 percent of the population was employed. Black labor force participation also hit a record 64.2 percent in 1989, with female labor force participation reaching an all-time record of 57.5 percent in 1990.

Real per capita disposable income increased 18 percent from 1982 to 1989, meaning the American standard of living grew almost 20 percent during the boom. The Carter decline in income for the bottom 20 percent of income earners was reversed, with average real household income for this group rising 12.2 percent from 1983 to 1989. The poverty rate, which had started increasing during the Carter years, declined every year from 1984 to 1989, dropping by one-sixth from its peak.

The shocking Carter-era rise in inflation was also reversed under Reagan. Spectacularly, inflation was reduced by more than half between 1980 and 1982, to 6.2 percent, and then was cut in half again for 1983, to 3.2 percent. The prime rate was cut by two-thirds by 1987 to 8.2 percent, going down to 6.25 percent by 1992. New home mortgage rates also declined steadily, reaching 9.19 percent
by 1988, then 8 percent by 1992. This disproved a common argument made by opponents of Reagan’s tax cuts—that they would increase interest rates.

The stock market more than tripled in value from 1980 to 1990, a larger increase than in any previous decade. Real personal assets rose 36 percent, from $15.5 trillion in 1980 to $21.1 trillion in 1990. Total real private net worth rose by $4.3 trillion from 1980 to 1989, totaling $17.1 trillion in constant dollars, an increase of one-third.

Even with the Reagan tax cuts, total federal revenues doubled from 1980 to 1990, growing from $517.1 billion to just over $1 trillion. In Reagan’s last budget year, fiscal 1989, the federal deficit declined to $152.5 billion, about the same as a percentage of GDP as in 1980, 2.9 percent compared to 2.8 percent.

In their incisive and prescient book
The End of Prosperity
, supply-side guru Art Laffer and
Wall Street Journal
chief financial writer Steve Moore note that Reagan’s recovery grew into a 25-year boom, with just slight interruptions by short, shallow recessions in 1990 and 2001. They write:

Similarly, Steve Forbes wrote in
Forbes
magazine,

In other words, just the
growth
in the U.S. economy from 2002 to 2007 was the equivalent of adding China’s whole economy to the U.S. economy.